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Stansted airport 'interesting' though bidding hasn't started, Morrison and Co

Monday 24th September 2012

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London's Stansted airport is in an "interesting" market and has spare capacity though it is too soon to say a group led by Morrison & Co will bid for the business, the Wellington-based investment bank's head of airports says.

Morrison & Co executive director Airports Group Steven Fitzgerald was commenting on a report in the UK's Telegraph that the firm has teamed up with the $19.7 billion New Zealand Superannuation Fund and Infratil to bid for Stansted. Fitzgerald declined to comment on whether there have been preliminary talks either with Stansted, its owner BAA or the Super Fund.

"The vendor is still at the pre-process stage," Fitzgerald told BusinessDesk. "Morrison & Co looks at airport transactions globally. Stansted is in a market that is interesting."

Stansted, Britain's third-largest airport, is being reluctantly put up for sale by BAA under pressure from the UK's Competition Commission, which has already forced the airport investor to sell the Gatwick and Edinburgh airports, and it is now set to lose control of Stansted.

The airport could sell for about 1 billion pounds, according to British media reports. BAA has fought a three-year legal battle to try to block the sale, the Telegraph said.

A spokeswoman for the Super Fund, which manages retirement funds for all New Zealanders, declined to comment on the report, which she called 'speculative'. Calls were referred to Morrison & Co's Fitzgerald.

The Super Fund would be joined in the bid by Infratil, the listed investment group managed by Morrison & Co. It would mark an extension of the investment relationship between the fund and the Wellington-based group, which invested together in the Shell New Zealand downstream assets including the petrol stations rebranded as Z.

The Telegraph reported that BAA's controlling shareholder, Ferrovial, has issued non-disclosure agreements with interested bidders for the sale of Stansted, which is being managed by Deutsche Bank and ING. The report says Infratil's interest in Stansted is surprising given it is currently trying to sell two smaller UK airports, Glasgow Prestwick and Manston in Kent.

Through Infratil's Prestwick operations, the company has forged a relationship with low-fare carrier Ryanair, which accounts for almost 70 percent of Stansted's traffic. The Morrison & Co group has held early talks with Ryanair, the Telegraph says.

Fitzgerald said the bidding process for Stansted may start in October, "so people will be forming their views."

The New Zealand bidders will be up against Manchester Airports Group, which is thought to have garnered support from Australia's Industry Funds Management for a bid. Investment banks JP Morgan, Citi Infrastructure Partners and Morgan Stanley Infrastructure Partners may also bid, the Telegraph said.

Infratil shares were unchanged at $2.14 on the NZX today and have gained 14 percent this year. The stock is rated 'outperform', based on the consensus of six recommendations compiled by Reuters, with a price target of about $2.30.

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